Growth Hacking vs. Customer Acquisition

One of my long-time inspirations, Andrew Chen, wrote a post in April of this year that if not introduced certainly popularized a term that has since caught fire - growth hacker/hacking. For me the term was and still is a hard to sink my teeth into. I’m more of an old school direct response, customer acquisition junkie, terms by comparison, that sound not only unsexy but perhaps outdated when compared to growth hacking.

A question I've wondered (at least since April) is where does growth hacking begin and customer acquistion end or vice versa. Here's what Andrew says in that famous post (emphasis added by me), “Growth hackers are a hybrid of marketer and coder, one who looks at the traditional question of 'How do I get customers for my product?' and answers with A/B tests, landing pages, viral factor, email deliverability, and Open Graph. On top of this, they layer the discipline of direct marketing, with its emphasis on quantitative measurement, scenario modeling via spreadsheets, and a lot of database queries.”

Most traditional marketers I know, even some of the finest minds whose efforts have produced nine-figure revenue will read the above, read it again, and then work on picking up their jaw from off the floor. Most of these marketers will say thank goodness they don’t have to launch their product in this environment. What that reaction and the above definition highlights is that we have entered into a new world of marketing. Quoting again from Andrew’s post, “For the first time ever, it’s possible for new products to go from zero to 10s of millions users in just a few years.” This is a critical point, and understanding the super platforms helps explain the nuances between growth hacking or the more traditional world of customer acquisition.

As I wrote when discussing the great affiliate brain drain, something has fundamentally changed in the last four years. At first, I thought it was offer based, that the quantity and quality of what was found on the typical CPA network had chanced. And, while there have been fewer home runs, it seems that offers really aren’t to blame. They may have lead to fewer people making as much, but the change in traffic is more to blame.

Historically, your typical performance marketer had the edge when new platforms came out. In the case of Adwords, it took years before other marketers put their full weight behind it. And even within the performance marketing community, the early adopters could gain a healthy lead time. By the time Facebook’s ad platform came out, transparency was greater, meaning good offers became cloned faster, and early adopters found themselves with copycats on their heels fast. Complicating matters, these platforms became less bullish, i.e., stricter with which performance ads could run. Combined, it meant focusing on aggressive tactics as traffic and offers were now commodities.

The best marketers were always slightly technical. The web is inherently technical, so understanding the building blocks of the web can only help when navigating it. Not surprisingly then, differentiation in traffic has become more of a technological endeavor, a) because those with technical expertise, when looking for an edge in traffic, have a) become rightfully unexcited about the saturation and competitiveness of current platforms, and b) realized that other options for growth exist. On the latter, other options have existed, but they have not always been repeatable, i.e, not the result of mega-platforms. The original "hacks" were one off tweaks which were quite manual and in many ways not able to be generalized to other businesses or products. Equally important, they weren't always technical.

Mattan Griffel in his presentation on growth hacking talks about one of the first such hacks, Hotmail. Mega-investor Tim Draper suggested the company put a footer on the emails sent. Now, users were turned into word of mouth marketers just by using the product. It worked amazingly well for Hotmail, but other companies couldn’t do the same trick. They needed to find their own. That’s where today's era of mega-platforms comes in. They are the universal Hotmail footer, a platform that allows just about anyone the opportunity to tap into a fire-hose of viral possibilities. But, growth hackers (and Andrew) will be the first to say the discipline isn’t about viral. They are marketers that come up with non-traditional solutions to common problems, who look for solutions that are generally not those you could plug and play - ala paid search. And, almost exclusively, they are solutions where the solution is programmatic.

As I look at the customer acquisition --> growth hacking shift, it is to marketing what has transpired in product development. Instagram, Pinterest, Facebook, Twitter, etc., these mega-tech companies were not founded by business people who hired product managers who in term worked with a technology team. They were all the same. The product guy was the tech guy who was the business guy. That’s not to say that any other combination will not succeed, but it does paint a case for making sure the team looks that way if a business resembles an Instagram or Pinterest. The same holds true for marketing. Not every business needs growth hacking. Groupon benefited from aspects of growth hacking, but its scale came from business model hacking combined with out-executing on traditional customer acquisition.

Today's customer acquisition techniques and platforms were once new, and unlocking them most effectively, ultimately meant doing so programmatically. That is why I tend to think of customer acquisition as the systematic scaling of strategies uncovered during the growth hacking process. If you can figure out the latter, it gives you a leg up on the former. Finding a good growth hacker though is akin to finding that technical co-founder. The really good ones aren't looking for jobs. It will only be "The New VP of Marketing" to quote for companies with the chance at being the new mega-platforms.